Archive for the 'strategy' Category

How to end tax expenditures the right way

[by JSC5]

As per Ezra Klein in today’s Wonkbook, Martin Feldstein has a plan for decreasing the deficit: end tax expenditures.

Now, regular readers of the blog will remember tax expenditures from one of my old posts inspired by the craziness of Hawaii’s ‘Exceptional Tree’  tax deduction. The basic point to remember with tax expenditures is that they give people money through the tax code instead of by cutting them a check directly. In many ways, tax expenditures and direct spending are exactly the same: the net effect on recipients is the same (they get more money), and the net effect on the government is the same (it gets less revenue).

But tax expenditures come with a whole host of negative effects. By making Swiss cheese of the tax code, they make compliance overly complicated. They distort work and income incentives. They don’t need to be reauthorized, so they tend to persist for a long time without any legislator taking a look at them and making sure they’re still a good idea. Furthermore, most people miscategorize tax expenditures as tax cuts instead of spending, so they are easier to enact and harder to repeal than regular spending programs. Just about any economist would tell you that we should run spending programs through normal spending procedures while keeping our tax code standardized and simple.

So it’s unsurprising that veteran economist/conservative political operative Martin Feldstein has come out against tax expenditures. As a foe of tax expenditures myself, I heartily welcome the support. And yet I find it hard to really trust his plan. Let me explain.

Feldstein begins his argument for cutting tax expenditures by mentioning three areas in particular that rely on the tax code for spending: education, child care, and health insurance. One gigantic tax expenditure – the mortgage-interest tax deduction – doesn’t get a mention until the very end of the article, when Feldstein says it’s probably best to  slightly reduce (not eliminate) the deduction “to avoid economic disruptions.” Did you catch the pattern? Tax expenditures that liberals and Democrats support get the axe. Tax expenditures that conservatives and Republicans support are handled with kid gloves, since – gosh! – they’re particularly important!

The lesson I draw from reading Feldstein’s politically-opportunistic support for tax expenditures is this: if we’re really going to end spending programs through our tax code, then we need to do it all at once and for everything. If you take it issue-by-issue, then there’s always going to be a big lobby in support of that particular expenditure and a small minority whose primary concern is tax expenditures in general. Mr. X is a high income homeowner and votes yes on eliminating education tax credits and no on mortgage-interest deductions. Mrs. Y is a low-income renter and votes the opposite way. Nothing gets done.

My proposal is simple: pass one bill to eliminate tax expenditures as a way to run programs and automatically convert all tax expenditures into equally-sized direct expenditures. Everyone congressperson who dislikes tax expenditures as a tool of government can get on board — regardless of the actual content of any particular tax expenditure. Tax expenditures won’t get used as a political football by advocates with an axe to grind. Then we can leave decisions about actual levels of spending to a case-by-case review at Congress’s leisure.

We get the benefits of a vastly-simplified tax code, with easy compliance and standard, predictable incentives. And small government conservatives would still find plenty to like here. The calculus has changed: everyone now realizes that these are real dollars being spent, moving through the regular appropriations process.

That’s what real concern about tax expenditures looks like. And that’s why I doubt Professor Feldstein’s commitment to Sparkle Motion.

The internet and privacy: stop taking the easy way out

[by JSC5]

[Update: Thanks to Jonathan Bernstein for linking to this on his site and giving us our biggest readership day since we started. For all of you new-comers, if you like what you see, please feel free to look around the rest of the site and sign up for our RSS feed.]

Jonathan Bernstein may be (is!) a brilliant analyst of the structure of American politics in the modern era, but I really hope people don’t start taking his words of wisdom on other major life issues seriously:

Kids: never, ever, ever, write something anywhere that you don’t want to see on the front page of the newspaper.  Forget the WaPo; the universe is going to make you suffer, and it’s just brutal.

Let’s imagine I’m an impressionable kid and I take Jonathan’s advice seriously. What effect does it have on me? I’ll give just two of many examples:

  1. I’m going to have a hell of a time maintaining long distance relationships of any kind (friendship, family, romantic). The phone only really works if you pre-plan a meeting time that works for both of your schedules, a challenge that becomes especially thorny if you’re calling across time zones. Written communication opens up the possibility of regular, spontaneous contact — the kind of contact that social relations thrive on — by letting the sender write when she has the opportunity and the receiver read it when he’s got a free minute. But would I really want the New York Times to run with the hyperlinked headline: “So-and-So Calls Shake Weight Ad ‘Funny as Shit’ ‘” ? Like an inmate or an astronaut, I guess I better restrict my long distance relationships to a once-a-week phone call from now on.
  2. I will never go on the record with an opinion stronger than “I guess it could be defensible to conclude X, but proponents of !X make some good points, too.” This one’s a no-brainer. It’s really hard to know what the big issues of the day will be 10, 20, or 50 years from now when people might be digging through my written record for a quote to exploit. No one’s ever been impeached for saying they love America, apple pie, and grandma — or for omitting their opinion entirely. If I want to have a successful career, clearly I’m going to have to turn into either a blithering idiot of a stereotypical politician on the one hand, or Elena Kagan on the other.

Whether we’re talking about private missives or public pronouncements, Jonathan Bernstein’s advice to keep yourself out of the written record is just terrible. When so much of who we are is mediated by writing, it’s detrimental to humanity to tell young people that the tyranny and whim of public standards of acceptability should determine who they are and what they write.* And unfortunately, Bernstein’s advice seems to be pretty common. The popular reaction to the Weigel affair, which Bernstein is writing about, seems to be: hey, he shouldn’t have written those emails with the expectation of privacy, and he should have known what was coming to him if they got out. That’s the typical advice to young people regarding internet privacy, and privacy in general.

Maybe it’s good strategic advice for an individual — but, given the developmental and experiential importance of putting yourself in your writing, maybe it’s not. Either way, it is a terrible standard to be advocating to the public. We desperately need to move away from a society that invests zero effort in understanding what someone is really trying to say and instead focuses on the ‘controversy’ surrounding the statement itself. We desperately need to move away from a society that doesn’t give a damn about context, presumptions of privacy, or the complicated inner world of all human beings.

I think most people realize we need to end this culture of public tyranny. And yet very few people seem to be willing to argue against it when it matters. Telling someone you’ll keep your trap shut if ya know what’s good for ya may help him avoid getting whacked by the mob, but it won’t do much to end the reign of terror of La Cosa Nostra. And that is, after all, what we need to do.

*This may seem at odds with my previous post on Elena Kagan, in which I defended her for making sacrifices and structuring her life to maximize her odds of ascending to the Supreme Court. I’d separate these two posts by noting that Kagan is an individual who should be free to choose the life she wants, which apparently involved neutering her public, written opinions in order to have success in her profession. That’s a legitimate choice for an individual to make, and far be it from me to start criticizing her work-life balance. People are allowed to prefer work. Jonathan Bernstein’s advice, however, applies more broadly to just about everyone, and affirms the principle that we all ought to judge others and expect to be judged by whatever the prevailing standards of middle-of-the-road, vanilla opinions are these days. As a standard that would apply to everyone, I find this very disagreeable and worthy of ridicule.

Fame and awkwardness

Besides being intensely jealous of JSC7’s brush with blogging fame in China, I also have one observation to add: the single biggest obstacle to spending time with interesting / important people isn’t the target’s busy schedule or sense of self importance. It’s your own awkwardness, your fear of your own awkwardness, and the target’s fear of your awkwardness and their own awkward reaction to it. The bottom line: we’d all be spending more time hanging out with the people we want to hang out with if we could give better signals as to our ability to hold a normal, interesting conversation.

This is also a major skill that great schools don’t teach.

ambition, jealousy, and the Supreme Court

What better way to revive the blog after settling back in to life in the US than with a post on ugly human character traits and our country’s highest court.

But first, an aside: I think it’s awesome that our Solicitor General is properly referred to as “General So-and-so”, and let me to all you overpaid private sector types who shudder at the thought of taking a pay cut to go work in government … being called ‘General Insert-Your-Last-Name-Here has got to make up for at least a few hundred thousand in compensation, right? Not that you’d always have to stand on formality; I’m sure you could have your underlings just call you Commander Fancypants. Also, you could start wearing ascots.

And now back to our regularly-scheduled blog post. General Kagan has been nominated to replace outgoing Supreme Court Justice John Paul Stevens. You can read complete, detailed coverage of Kagan’s career at SCOTUSblog. Commandant Kagan’s career has been illustrious, to say the least: Princeton undergrad, Harvard Law, Harvard Law Review, Supreme Court clerk, private practice, tenured professor at Chicago, service as a government lawyer in several positions in the Clinton White House and briefly in the Senate, law professor at Harvard, Dean of Harvard Law School, and now Solicitor Fancypants under Obama.

But to read the popular and elite commentary on the issue, you’d think that Kagan’s very success is a problem for her nomination. Uber-blogger Andrew Sullivan has been all over this, decrying Kagan’s ‘careerism’ (a dirty word, apparently) in what has become a typical view among pundits and Average Joe’s alike: “Her life, so far as one can tell, is her career.” That’s an odd criticism, coming from a man who admits he spends upwards of 12 hours a day, every day, blogging for a living. It’s also an incoherent position on the merits. Such criticism of Kagan boils down to a misunderstanding of the role of ambition in life and a failure to engage in basic self reflection.

First, let’s examine Sullivan’s particular gripe about Kagan’s ‘careerism’ and her supposed risk aversion. “Name one risk she has taken with her career,” he challenges his reader, and then says of himself, “I can’t.” He’s really talking about Kagan’s remarkable track record of not taking public, forceful positions on issues like abortion, terror policy, gay marriage, and so on during her illustrious career thus far.  That level of caginess is remarkable, and we’ll get to that in a second. But for now, let me answer Sullivan’s question from a different perspective.

What risks has she taken? How about giving up the promise of an extremely lucrative career as a lawyer in private practice? Someone of Kagan’s intellect, education, and work ethic can count on making partner and holding down million-plus salaries in relatively short order. Instead, Kagan left her firm and became an academic. “Big deal,” you might say, “don’t academics have comfy, risk-free jobs?” Sure they do. But then Kagan took a 2-year sabbatical from her cushy gig at Chicago to go lawyer for the government. And when Chicago gave her an ultimatum — come back and teach or be gone forever — she gave up tenure for the extremely risky life of a politically-appointed government lawyer. No public sector union or bureaucratic protection for her. She served at the pleasure of the president. Fall out of favor and you lose your job. Work at a pace comically similar to a character from The West Wing. That seems like a really big risk to me. It’s a risk that most people in this world aren’t willing to take. The vast majority of people in her position would (and do) opt for the paycheck of private practice, or the security of academia. Kagan decided to get involved, instead. And years later, when Obama asked her to leave her job as Dean of Harvard Law School so she could spend her days kissing Senators’ asses for confirmation, listening to people whisper nastily about her sexual orientation on TV, newspapers, and blogs, and have her briefs and oral arguments attacked from left and right by people unfamiliar with the unique role of the Solicitor General — she said yes. If Andrew thinks her career represents some sort of risk-free romp through the corridors of power, then he hasn’t thought very rigorously about what it really means to make those decisions.

Sullivan’s main problem with her careerism, however,  is with the coyness and caginess that goes along with it. He’s outraged that she hasn’t, in his opinion, come out and definitively told the public whether or not she is gay. He’s outraged that she hasn’t written 40 opinionated blog posts about the issues of the day for the past decade, as he himself has. Underneath this criticism is a concern that Kagan has had the part of her personality that generates and articulates opinions attenuated. Somehow, she seems less human than Andrew might prefer of a nominee to the highest court in the land.

While it’s fair to call Kagan extraordinarily coy, it borders on insanity to blame her as the nominee. If Kagan is coy, that’s because she has correctly read and understood the rules of the game for people who want to be on the Supreme Court. Ever since Bork, everyone knows that you get confirmed by never taking controversial public stances on things people actually care about. Them’s the rules. You can blame the rules, as Matt Yglesias thoughtfully does, but you really can’t blame Kagan herself for seeing and following them better than her contemporaries. That’s just called being good at what you do.

As Jonathan Bernstein astutely points out, this whole controversy boils down to a misunderstanding of the role of ambition in life:

1.  Regardless of the way we choose Justices or any other top position, we’re going to get candidates who are highly ambitious; there’s just no way to avoid that.

2.  Therefore, it is foolish to count it against any candidate that she appears to be ambitious, or that she does the sorts of things that people who want to reach the Court (or other high office) organize their lives to do.

3.  It is possible, however, to think of reforms that would change the ways that ambition is expressed.  If you want more explicit statements of political positions, make that a requirement.  Just don’t mistake any of that for purging ambition from the system, or for opening the gates to less ambitious people.

I think Jonathan is onto something here, and so I’d like to take a moment to defend ambition and ‘careerism’ from the ignorance displayed by arguments along the lines of Andrew Sullivan’s. Sullivan mocks Kagan for the sin of, as the NYT reported, wearing a judge’s robes in her high school senior yearbook photo and for daring to express from such an early age her ambition to serve on the Court. In my mind, that pretty much makes Sullivan a jerk. Certainly most of us didn’t have such specific high aspirations for our lives when we graduated from high school. But I think Sullivan isn’t being honest with himself or with us if he means to say that he never had high hopes and dreams for his life. I remember very clearly wanting to shoot for the stars when I was in high school. I still do. I’m pretty sure Andrew had some hopes and dreams, too. Mine weren’t and aren’t nearly as specific as Kagan’s — but that’s not to say that my way of being is better than hers. In a lot of ways, having a more clear idea of what I want to do would really help me organize my life around achieving those goals.

Unless Sullivan is some sort of inhuman brute who never had a childhood dream, then his critique seems to be more about Kagan’s success at translating her childhood dream into a career than it is about her dreaming capacity as such.

Sullivan’s complaints, and the many others who share them, reveal more about the speaker than they do about Kagan. It’s plain old Daft Punk jealousy that someone else was harder, better, faster, or stronger than us — smarter than us, harder working than us, and ultimately more successful than us. Or, Sullivan’s complaints are that Kagan had different goals than he did. He wanted to pontificate from his La-Z-Boy. She wanted to be a Supreme Court Justice. Maybe Sullivan wants to say that wanting to be a Justice is beyond the pale. That’s a problem, because I’m pretty sure it’s an awesome job, and I doubt I’d turn it down if I had the chance. And I doubt Andrew would, either. The next step is to organize one’s life around attaining that goal. That’s something Kagan was willing to do, so good for her. It’s not something Andrew has done, nor I (given that you’re reading this public blog post). But it’ll be a cold day in hell before people in general give up their dreams to please our own sense of propriety about just how high they’re are allowed to rise and just how hard they’re allowed to work and just how much they’re allowed to give up in return for achieving their goals.

David Brooks is an alien

I usually don’t spend too much time trying to figure David Brooks out. My quick and dirty read on Brooks is that he’s reflexively and unthinkingly moderate, or rather just to the right of center. Like social studies teachers of yore, Brooks thinks there’s something particularly magical about compromise, incrementalism, tradition, bipartisanship, and the happy medium. Don’t get me wrong, those things are all great in their own way, but some things just don’t lend themselves to such an analysis. Yet Brooks insists on jamming every little policy or political issue he comes across into that one analytical mold, like a three-year-old doing a jigsaw puzzle. I personally prefer a little more flexibility in my analytical toolbox.

That said, I’m not completely anti-Brooks. The man has written some nice columns, and it’s good to have a voice of reason talking to right-of-center folks. But today’s column really makes me wonder if Brooks isn’t actually human, but an alien trying to understand our political system and failing miserably.

Here’s Brooks’ opening sentences:

Going in, I was as cynical as everybody else about the Blair House health care forum. I was planning to watch for a half-hour and then write about something else.

But the event was more meaningful than that. Most of the credit goes to President Obama. The man really knows how to lead a discussion. He stuck to specifics and tried to rein in people who were flying off into generalities. He picked out the core point in any comment. He tried to keep things going in a coherent direction.

Moreover, he seemed to be trying to get a result.

The result, he goes on to argue, is a possible compromise between Democratic and Republican health care policies.

Because of an odd confluence of events (overabundance of leisure, and a rural residence with little to do beyond trudging in the woods and going for a run – which I had already done that day), I ended up watching 5 of the 7 hours of the health care summit yesterday. Now, I’m no expert on American government or political science, and neither is Brooks. But what I saw at the health care summit was a President putting on a show for a very small number of Democratic legislators, primarily in the House, in order to give them cover and convince them to pass the Senate bill and then patch it via reconciliation in the Senate. That fact that Brooks thinks the summit was actually aimed at forging a bipartisan compromise shows his complete lack of understanding of the American political system. Just look at the five key structural incentives at work in the current health care process:

  • Actual negotiations on something this important and contentious, touching core constituencies in each party, cannot be conducted in public. As Matt Yglesias astutely pointed out a couple weeks ago, imagine if you were to negotiate with your significant other about whose parents house to go to for the holidays this year. Maybe you could reach an accommodation by seriously discussing your real preferences and likes and dislikes on the subject — if you could talk in private. But what if the negotiations were televised on CSPAN and piped right into your in-laws’ homes? Privacy is an essential component when negotiating about a compromise that would inevitably throw a major constituency of each party under the bus.
  • Democrats have little incentive to further compromise the Senate bill (as amended by the President’s proposals for a reconciliation patch). First, it’s already a large, substantive compromise to conservative ideas. Of course, Democrats have won zero Republican support despite these very painful compromises from the liberal ideal. They’re getting tired of unilaterally compromising. Second, and most important, all the political incentives for the party as a whole point towards passing the bill as is, and leadership is working overtime to make sure the individual members understand that.
  • Republicans have zero incentive to compromise. As many observers like Ezra Klein have argued, in the US system of government and particularly in the Senate, “the minority has both the incentive and the power to make the majority fail” and “the minority has learned that they profit in the next election when the majority is judged a failure.” That pretty much sums up the incentives facing any minority party in the modern political climate, and last time I checked, Republicans were in the minority.
  • Health policy works best when comprehensive, and could be disastrous if done piecemeal. For more on this, do some reading on the ‘insurance death spiral’. Cost control, mandates, exchanges, subsidies, insurance reforms … these things all go together as essential pieces. Remove on, and it doesn’t work.

An educated, dispassionate observer of American politics should look at the summit and see it in light of these structural incentives. And we all know that Brooks is smart and dispassionate. But he watched the summit and saw a grand, substantive effort at bipartisan compromise. That makes Brooks either a wild-eyed, hopelessly-naive optimist, or an alien. I’m voting for the latter.


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This is a group blog. JSC5 currently writes from the US. JSC7 writes from behind the Great Firewall of China.

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